Tail Wags Dead Dog

San Diego  On Saturday, April 21, at the San Diego Four Points Sheraton, City Attorney Mike Aguirre delivered the keynote address to a conference sponsored by Municipal Officials for Redevelopment Reform, whose head is Chris Norby, chair of the Orange County Board of Supervisors. Following is Aguirre's speech.

It's good to see you all. I wanted first of all to thank Chris and Marsha [Norby] for coming to San Diego...and all of you. It's very nice to see some of our San Diego revolutionary leaders out there. I see Richard Rider, a known revolutionary in San Diego.

You know, you all are so important, not only to your communities but to the entire state of California, because you are growing an idea that has, if it can fully flower, a real potential for bringing about the restoration of the power of government to actually serve the purpose that government is organized to serve. Which is to advance the general welfare and not the private economic interests of those bondholders and lawyers and self-seekers who use the government to gain unfair advantage over their fellow citizens and, in the long haul, do great destruction to the ability of government to perform and meet its responsibilities.

I want to paint a picture for you, and I want you to imagine this last Monday morning. I was seated up on the dais, where the city council meets. And in the audience was a very large group of police officers and firemen. And one of the issues of financial irresponsibility that we have engaged here in the city of San Diego is that we created between two and three billion dollars' worth of benefits without any money to pay for it. And I tell my friends in law enforcement...I've been in law enforcement in one way or the other since I graduated from law school in '74. And I would prosecute about 35,000 cases a year with our police department and other law enforcement agencies. And we did that on the premise that our job is to maintain the standard of the law. And I said to our police officers, "How can you enforce the law when you know that you are the beneficiaries of benefits that were created illegally? Both in terms of conflicts of financial interest, and where the financial interest in conjunction with the deals that were made in San Diego in 1996 and 2002, in which benefits were exchanged for an agreement to suspend the rules of arithmetic in counting the contributions that were needed to finance the benefits that were being given. And your union leaders come at the City every year or two or three with more demands and ever-escalating, cascading financial commitments from the City that the City can't meet. So much so that we were responsible for the largest municipal securities fraud in American history, which I had the unfortunate duty of negotiating with the SEC."

Now, you might say, "Well, well, what has that got to do with redevelopment?" What that has to do with redevelopment is that it is a clear signal that those who are in positions of responsibility in government are using their power irresponsibly to benefit those who are driving the political system.

You know, I don't know anything about redevelopment reform -- and Chris knows more about it, and I'm so fortunate to be able to be working with him -- but I will tell you what I've seen about redevelopment reform. In 2002 and 2003 and 2004, the City of San Diego allowed a private developer to wipe out 26 square blocks of downtown San Diego...26 square blocks of downtown San Diego, in and around the ballpark. And the idea was, was this developer would be given that land, and he would use his private capital to build 2500 hotel rooms that would then generate the TOT [transient occupancy tax] necessary to make the payments on the bonds for the hotels. And right at the last moment, because I had been involved in that, right at the last moment, one of the lawyers for the promoter who had received this largesse from the City...told me that the owner had decided not to build the hotels after all because first-time hotel builders don't make any money. And he was going to still continue to receive the land and all of the entitlements but not build the hotels. And I said, "Well, that, that won't be possible," because myself and Pat Shea, both of us were involved in actually being in favor of the downtown ballpark, and we both said, "Well, you won't be able to do that because that would be a breach of your duty to the voters, because they voted for privately providing financing, and the government wasn't supposed to subsidize the payments for the bonds for the ballpark."

Well, I went to see the mayor, the mayor that Time magazine found to be one of the worst three mayors in the country, who is no longer the mayor, and I was not elected at the time, and I gave him a warning. I said, "Here's what I understand is coming...You should stop it!" The local newspaper, which was connected to the new downtown ballpark because nobody reads the newspaper except to read the sports page. Unfortunately. And I say that facetiously, but actually it's true... it's actually true. That if they wiped out the sports page, there would be almost no circulation for the newspaper. And so they've got themselves interconnected...economically interconnected.

So when you think about redevelopment and who's getting the goodies as a result of redevelopment, you have to understand that there are a number of constituent groups: the bondholders, I should say the bond underwriters; the lawyers, the big law firms that structure the deals; all the consultants that are hired to wire the deal at the council level; the campaign contribution flow of cash that gets distributed. And then, in this particular case, the mayor was confronted with editorials and lobbying from the chamber of commerce.